Women who don't negotiate could be making a smart choice

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Women get more advice on how to negotiate than we probably need. We're told to stop being such a woman and Lean In, but that being assertive will most definitely backfire because of our gender. Research has shown that women don't negotiate as much as men, and that when they do assert themselves, they're penalised, theoretically leaving many of us in a bind. Some women who opt out, however, do so for strategic, financially beneficial reasons, new research shows.

At times, women decline to negotiate because they understand that they're already getting the best deal, a new study from Harvard says. "We find that women appear to correctly choose, in terms of financial returns, when to enter [negotiations] and when not to," said Christine Exley, one of the researchers and an associate professor at the Harvard Business School. "I see that as a more optimistic finding."

The researchers set up various negotiation scenarios between people who represented workers and companies. Unlike other studies, which tend to focus on bias women might face when negotiating, the researchers tried to remove any gender-based judgment from the situation. The negotiations happened anonymously, via instant messenger, meaning that neither the broker nor the company knew each other's gender.

There was also complete transparency: Workers earned a certain amount of money based on their performance of a simple task; companies got a certain amount of money based on their workers' performance. Everyone knew how he or she did on the task. The two had to negotiate how much each party got to keep. In one scenario, the workers could choose to enter negotiations or just take the company's offer. In another scenario, everyone was required to contest his or her wage.

When given the choice, women are 11 percent less likely to enter negotiations than men, confirming previous research. But when they looked at the women who opted out, the researchers found that they were offered a wage that exceeded or equaled their "market value," which in this case, was how well they did on the task compared with others. In other words, they're already getting a good deal, so they don't haggle.

The "Lean In" theory of business dealings would suggest that these women should still negotiate, because people tend to gain from negotiations. To test that theory, the researchers looked at what happened when the women were forced to negotiate. In that scenario, the women's wages decreased. They lost money because they were stuck in hard negotiations, ones in which their value was low, but they still asked for more money.

Before you read that finding as proof that women are bad negotiators, know that the men didn't have any better results when forced to lean in. They just entered negotiations more often, and experienced losses in the hard negotiations, too.

"In some ways it's a good finding," added Exley. "It holds promise that perhaps, in controlled environments, women are going to be great judges about when they should negotiate or lean in."

Most negotiations don't happen in controlled environments. Because of a lack of pay transparency and a murky understanding an employee's given worth, women often don't know what kind of negotiation they're entering, an easy one or a hard one. Women are more likely than men to say they don't have a good understanding of how pay is determined at their company, a recent Glassdoor survey found. That might explain why more women don't negotiate. "What might be very much a possibility is that, as a woman, I might systematically underestimate what I'm worth," said researcher Muriel Niederle, a professor of economics at Stanford University, "and therefore I might not drive a hard enough bargain." Maybe what women need, then, isn't to be told how to negotiate but to work only in organisations that have clarity about pay and what employees are worth.